The Nigerian government has delayed the sale of telecoms company Nitel, which was due to have been signed on Thursday.

The delay centres on a disagreement between the buyers and privatisation officials over penalties for failure to meet service targets.

"Some issues have arisen in the last minute that will require alterations in the document which will require the approval of [Nigeria's president]," the country's deputy director of privatisation, Chibua Awachebe, said

"In this regard, we have decided to defer the signing of the agreement."

Investors' International - which plans to contract out the management to Portugal Telecom for five years - claims the delay is only a technicality, although some reports suggest that the whole deal could be in jeopardy.

The preferred consortium is headed by Chief Bode Akindele, a businessman of the Yoruba tribe, who has a variety of business interests from flour milling to shipping.

Consortium members also include Nigeria's largest bank, First Bank of Nigeria.

Collapse?

BPE director general Nasir Ahmed el Rufai said the talks earlier this week had almost collapsed because of the disagreement.

"The truth of the matter is that we were about to walk away and go to the reserve bidder," he said in an interview published on Thursday.

A huge amount of investment is required to tap the potential of the Nigerian market.

There is fewer than one telephone line for every 250 people and getting a line installed can be extremely difficult because of bureaucracy and corruption.